IT services company EOH says the termination of the Microsoft channel partner agreement with its subsidiary, EOH Mthombo, will potentially result in profit impact of approximately R10 million in the current financial year.

This as the group confirmed it has been advised that Microsoft has given notice of its intention to terminate its channel partner agreement with EOH Mthombo, one of its subsidiaries, with 30 days' notice.

In a statement, EOH says it has not been provided with any reason for the notice of termination at this stage.

"The effect of this notice, if acted on, will be that group subsidiary company, EOH Mthombo, will no longer be a direct reseller of Microsoft licences with a profit impact of approximately R10 million in the current financial year. However, Microsoft remains an important part of EOH's network of the more than 50 technology partners within the EOH Group and resolution of this matter is a priority.

"EOH has initiated plans to ensure minimal disruption to customers and to limit the potential impact on the business, until more clarity has been obtained. In this regard, EOH Group CEO Stephen van Coller is actively engaging Microsoft to better understand and resolve this matter as soon as practically possible."

Additional announcements will be made as soon as more detailed information is available, says the company statement.